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20190820204934mccormick Company Workbook Autosaved

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Instructions To complete this workbook, answer the questions on each worksheet. Questions Note: We will use Excel for discounting and NOT USE the formula for any calculations. 1. McCormick & Company is considering building a new factory in Largo, Maryland. The purchase price of the Land is $14,000,000. The building equipment is expected to cost $350,000,000. What will be the cash outflow for the project at the time of purchase (year zero)? We call this cash flow zero. Please round to the nearest $100,000. That makes the purchase price of the land $14.0 million. 2. Mc Cormick expects to produce a new product that is "Secret" at this point. However, there are some estimates of revenue, expense, depreciation and tax. To simplify, you have been asked to assume that revenue, expense and tax are all cash flow numbers. We only discount cash flows. You are requested to calculate annual after tax cash flow for the "Secret" project. Note: Depreciation is not a cash flow. The cash outflow associated with depreciation happens when the building and equipment is purchased. This is shown as cash flow zero. We will make an assumption that the company will use straight line depreciation of 10% per year for tax deprecation. This will simplify our work. The actual tax code depreciation is too complex for this problem. Depreciation ends in year 10 when all of the plant and equipment, $350 million will be recovered. Land is never depreciated. Fill in the blanks to the right in the Q-2 table 3. ...
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